TRADE AND ENVIRONMENTAL ISSUES

AT
WTO

SUBMITTED TO: Seema Siddiqui

Assistant Professor of Law
SUBMITTED BY: Kunal Singh
5th yr B.A.LL.B (hons.)
Roll no. 72

RMLNLU, University of Law, Lucknow

Table of Contents

Topic

page(s)

INTRODUCTION..............................................................................................3
Origins of trade and environmental conflicts.....................................................3
Research Methodology.......................................................................................4
Reconciling Trade and Environment..................................................................7
Environment and WTO Preamble......................................................................9
The WTO-MEA Relationship...........................................................................11
Environmental Subsidy....................................................................................13
Precautionary Principle....................................................................................15
GMOs and Bio-safety..................................................................................16
India and Environmental Issues at WTO.........................................................17
Conclusion........................................................................................................19
BIBLIOGRAPHY............................................................................................21

INTRODUCTION
Origins of trade and environmental conflicts
International concern for the environment, except in particular areas
such as marine pollution and aircraft noise, is of relatively recent
origin. Protection of the environment was not a major issue when the
General Agreement on Tariffs and Trade was drawn up. Not a word
was said about the environment in GATT 1947. The same is the case
in the charter of UN and the treaty of rome establishing the European
Economic Community. It was only in the beginning of 1950s, a
number of widely read books and films 1 stimulated a world wide
movement dedicated to preservation of the environment.
Indeed, the GATT does not explicitly refer to the term environment.
Until recently, trade policymakers and environmental officials
pursued their work on separate tracks, rarely perceiving their realms
as interconnected. Topday, environmental protection has become a
central issue on the public agenda and trade and environmental
policies regularly intersect and increasingly collide. This reflects the
fact that norms and institutions of international trade remain rooted
in the pre-environmental era that there exists no international
environmental regime to protect ecological values, to reconcile
competing goals and priorities, or to co-ordinate policies with
institutions such as GATT.2
From a trade perspective, environmentalism looms large on the
horizons of new issue and it is viewed with some trepidation. 3 This
reflects, in part, evolution in the focus of trade liberalization efforts.
Now 148 countries Contracting parties subscribe to the GATT rules
regulating trade and GATT has made great progress in its original
goal of reducing tariffs . As a result, attention has shifted to non-tariff
1 Rachel Carson and Jaques-Yves, The sea around us,1951
2 Daniel c esty, Greening the Gatt,IIE,washington
3 Ibid

barriers to the free flow of international trading system has become a

market access regime that goes well beyond concerns about bordere
controls, to cover international and domestic economic issues that
require at least partial harmonisation of variety of national policies.

The Tokyo round of GATT negotiations in the 1970s consolidated the

assault on non-tariff barriers and produced a series of GATT codes to
combat some of the obstacles. The Uruguay Round of negotiations
advancedthe process further by adding new non- tariff concerns such as
intellectual property to the GATT agenda. Trade experts see this as a
pattern to cutdown non-tariff barriers. Some see this as protectionist
interests finding new ways to bend trading system.4

4 S. shrybman, international Trade and the environment, 1990, pp. 33 ;

www.wto.com/ps/enviro.asp

The Environmental Challenge

While the vituperative nature of some of the assaults on the international
trade regime has been excessive, the charge that trade and trade
liberalisation can be environmentally counterproductive is accepted even
by the most ardent free traders. 5 Stripped of its ad hominem aspects, the
environmentalists challenge to free trade boils down to four central
propositions:

(a) without environmental safeguards, trade may cause

environmental harm by promoting economic growth that
results in the unsustainable consumption of natural
resources and waste production.
(b) Trade rules and trade liberalisation often entail market
access agreements that can be used to override
environmental

regulations,

unless

appropriate

environmental protections are built into the structure of

the trade system.6
(c) Trade restrictions should be available as leverage to
promote
particularly

world

wide

to

address

environmental
global

or

protection,
transboundary

environmental problems and to reinforce international

environment agreements.7
(d) Even if the pollution they caused does not spill over into
other nations, countries with high environmental standards
have a competitive advantage in the global marketplace
and put pressure on countries with high environmental
5 ibid
6 id
7 id

standards to reduce the rigor of their environmental

requirements

Reconciling Trade and Environment

Firstly, international trade and protection of the environment are both
essential for the welfare of mankind. In a majority of the matters, these
two values do not come into conflict with each other. Rather they
supplement each other.8 Section 2.19 of agenda 21, which was adopted
at the UN conference on Environment and Development in 1992 states
that environment and trade policies should be mutually supportive. An
open multilateral trading system makes possible a more efficient
aloocation and use of resources and thereby contributes to an increase in
production and incomes and to the lessening of demands on the
environment protection. A sound environment, on the other hand,
provides the ecological and other resources needed to sustain growth
and underpins the continuing expansions of trade.9
Secondly, it is beyond the scope of authority allotted to the WTO, to
take active steps for the protection of environment. Its function is rather
confined to the successful implementation of the provisions of various
agreements covered under WTO. It is clear at the outset, from the
provisions of the WTO, that the organisation has been established only
for the promotion of international trade and not for the protection of the
environment. The WTO agreements apply to measures protecting the
environment only where and insofar as they have an impact on
international trade. Relatively very few of the environmental measures
fall into this category.10

8 s charnovitz, exploring the environmental exceptions in the gatt, (1991)

25 Journal of the world trade 37
9 id
10 id

Thirdly, nothing in the WTO agreements requires that free trade be

accorded priority over environmental protection. Rather, the preamble to
the WTO agreement, acknowledges that expansion of production and
trade must allow of the optimal use of worlds resources in accordance
with the objective of sustainable development. It therefore, seeks both,
to protect and preserve the environment and to enhance the means for
doing so in a manner consistent with each member countrys respective
needs and their concerns at different levels of economic development. 11

11 supra n.5

Environment and WTO Preamble

Prior

to

the

disinclined

founding

to

give

of

much

the

WTO

weight

in

to

1995,

dispute

environmental,

settlement

and

other

panels
social

were
policy

considerations in 'determining how trade and domestic policies should be craned for members to
comply

with

GATT

non-discrimination

obligations.

However,

reflecting

the

trend

in

intemational_agreements that makes specific reference to the need to balance the trade and economic
objectives of the GATT, GATS, TRIPS and other WTO agreements on the one hand and environmental
policy considerations on the other. The opening paragraphs of the Preamble to the Agreement
Establishing the World Trade Organisation States;The Parties to this Agreement, Recognising that their
relations in the field of trade and economic endeavor should be conducted with a view to raising
standards of living, ensuring full employment and a large and steadily growing volume of real income
and effective demand, and expanding the production of and trade in goods and services, while
allowing for the optimal use of the world's resources in accordance with the objective of sustainable
development. seeking both to protect and preserve the environment and to enhance the means for
doing so in a manner consistent with their respective needs and concerns at different levels of
economic development.12
By virtue of the reference to sustainable development and environmental
goals in the Preamble, the Appellate Body in the 1998 Shrimp Turtle decision
determined that the negotiators of WTO agreement were fully aware of the
importance and legitimac13y of environmental protection as a goal for national and international policy.
They concluded that GATT and all other WTO. Agreements must be read by a treaty interpreter in the
light of contemporary concerns of the community of nations about the protection and conservation of
the environment.14
The Appellate Body in US-Gasoline case emphasised the importance of the
Preamble in the context of environmental issues. The Appellate body affirmed
"indeed in the preamble to the WTO agreement and in the Decision on Trade and Environment, there
is a specific acknowledgement to be found about the importance of co-coordinating policies on trade
and the environment. WTO members have a large measure of autonomy to determine their own
12 Sabrina Shaw and Risa Sauchwartz, trade and environment in the WTO- State of play, Journal of
World Trade, 36(!), 929-154, 2002
13 ibid
14 id

policies on the environment (including its relationship with trade), their environmental objectives and
the environmental legislation they enact and implement. In so far as it concerns the WTO, that
autonomy is circumscribe only by the need to respect the requirements of the General agreement and
other covered agreements." 15

15 Thomas J. Shoenbaum, International Trade and Protection of the environment, 91 am j. intl L.

268 1997; www.wto.com/ps/enviro/thoshoe.asp

The WTO-MEA Relationship

The

relationship

between

WTO

and

Multilateral

Environmental

Agreements-(MEA) was a hotly debated topic during the last decade. There are at least nearly 250
MEAs in existence, of which the WTO secretariat has identified 22 with potential trade policy
implications. Many of these agreements protect specific group and classes of flora and fauna, while
others facilitate the joint management of resources taken in the global commons and still others focus
on broader environmental problems.16
There

are

long-standing

expectations

about

what

the

WTO

can

and

should

deliver in this area. The first concerns WTO disciplines and the extent to whichthey accommodate
environmental concerns. In the CTE, some members have proposed that a legal framework be
developed to clarify the relationship between the WTO and MEAs, with specific reference to the
exceptions provision in article XX. Other WTO members would like to see other areas of WTO
disciplines clarified with respect to the environment, such as the TBT, SPS TRIPS and Agriculture
Agreements as well as GATS. Some other members would like to have environment related results in
some or all of these agreements, while others feel confident that environmental concerns are already
sufficiently dealt with these agreements. At this stage, individual proposals continue to be submitted in
the CTE and its various committees that oversee each agreement.17
The spectrum of proposals submitted to the CTE can be classified into four
broad categories. Firstly the status quo, approach which is based on the premise that the WTO already
has sufficient scope to accommodated the use of trade-related measures pursuant to MEAS & same
only a small number of MEAs contain trade measures, thus by far there has not been any disputeconcerning trade measures applied pursuant to an MEA.18
The second approach is that of a waiver, under which WTO members
would take a decision to authorise members to denial from their obligations for a limited period of
time. Given the range of provisions in the WTO some members consider that WTO rules do not
require any amendments. A waiver is subject to adoption by consensus, although it is possible for a
member to call for a vote, which would be subject to approval by three quarters of WTO members. A
waiver is time-limited and can be renewed.19

16 www.wto.com
17 ibid
18 supra n.5
19 Daniel c esty, greening the GATT, 1999, IIE 12 ; www.wto.com

The
of

third

type

WTO

of

approach

rules.

Many

or

guidelines.

understanding

may

members
In

be

considered

have

proposed

order

to

allow

to
for

for

provide

for

the

adoption

predictability

clarification

for

of

an

guidelines,

procedural and substantive Lriteria have been suggested.

Severall

members

relationship

between

clarification

would

have

advocated

WTO-MEA
increase

that

along

the

predictability

is

fourth
lines

and

of
legal

approach

to

clarify

co-operation.
certainly

the

Such

and

avoid

imports.

These

unnecessary conflicts.23
Trade

measures

may

include

regulations

on

exports

and

or

may include outright prohibition or bans on trade, quotas and various licensing and registration
schemes.

Trade

measures

may

have

many

motivations.

International trade may expand or create markets that encourage over-exploilalion of resources.
Limiting or eliminating trade may assist national efforts to enforce limits on harvesting or to eliminate
poaching.

In

contrast,

encouraging

certain

type

of

trade

may

ease

the

economic

burden of achieving conservation and environmental protection goals. Sometimes trade measures that
support environmental goals often conflict with the requirements ofGATT and other WTO agreements
and may not qualify for one of the general exceptions provided by these agreements. The thorniest
problems lie in resolving conflicts emerging from actions taken by WTO members participating in an
MEA that adversely affect the commercial interests of other WTO members who are not the
participants in the MEA.

Environmental Subsidy
There has been increasing emphasis by many countries on 'win-win-win'
outcomes from future WTO negotiations, which would benefit trade, environment and sustainable
development. Several WTO members advocate for the removal of tariff escalation and tariff peaks for
forest and leather produces and subsidies in agriculture and fisheries in order to contribute to both
environmental protection and trade liberalisation.
While

initial

discussion

concentrated

on

the

benefits

of

eliminating

agricultural subsidies, recent proposals have highlighted the potential contribution of the WTO in
addressing the major trade distortion affecting the fisheries sector, i.e. subsidies. Following the failure
at Seattle US and some other countries are now striving to address those subsidies that contribute to
the unsustainable use of global fisheries recourses. The fisheries issues are a complex and highly
politicised matter and is part of the larger issue of sustainable fisheries management. The complexities
can be seen in the light of the recent wave of potential fisheries related disputes. The depleted state of
global fish stocks has become a major economic and environmental concernnow central to the trade
and

environment

which

has

debate
trade

in

the

mandate,

WTO.
would

The
be

potential

to

examine

contribution

of

the

restrictions

trade

the

WTO,
and

distortions that impact upon this sector.

(c) TRIPS and Biodiversity

Another

long

standing

debate

covering

the

relationship

of

trade

and

environment is the compatibility of the TRIPS and the Convention on Biological Diversity (CBD).
The issue has got a new lease of life in the recent discussions in the CTE, TRIPS Council and the
CBD. The developing countries are advocating for the implementation of TRIPS and CBD in a
mutually satisfactory way. India has expressed the view that TRIPS Agreement is in conflict with the
CBD,
because
to

the

overrule

provisions
the

of

sovereign

TRIPS
rights

regarding
recognised

private
by

the

rights
CBD.

are

having

Currently,

potential

nothing

the

TRIPS agreement prevents a person from. patenting a genetic material, a plant, for instance-originally
form another country without having to fulfill some of the basic principles of the CBD, such as benefit
sharing prior, informed consent and protection of the traditional knowledge associated with he genetic
resource.20

20 A.k. Kaul , trade and environmental law, 1st ed. 2005, p 220

Precautionary Principle

Although

precaution

is

fixture

in

both

the

Preambles

and

working

articles

of many multilateral environmental agreements, recently the principle has been the focus of intense
debate

in

the

area

of

food

safety

and

GMOS.

The

precautionary principle was first introduced in Germany in the 1984 International Conference on the
North Sea. Although the principle was not referred to as such, the agreement contained the idea of
limiting pollutants due to a lack of knowledge an in advance of proof of their harmful effects.
The

precautionary

principle

has

been

defined

as

taking

precautionary

measures when there is insufficient scientific proof, yet when inaction could lead to irreversible
damage

or

risks

to

human

health

or

the

environment.

The

controversial issue that surrounds the principle is not to the determination of whenthe threshold shifts
the burden of proof towards protection of the environment, or health or safety. This threshold can be
high, when it involves serious or irreversible harm to the environment, or lower, when it may cause
harm to the environment.21
The

flexibility

weakness.
subject

It

of

to

agreements.

has

the
been

varying
22

Several

precautionary
applied

interpretations
WTO

principle

to

many
and

members

is

its

different
has

have

many

strength
environmental
definitions,

complained

that

as

well
issues
in

as

its

and

is

international

there

is

no

internationally agreed definition of the precautionary principle. They claim that although the principle
has been recognised in international agreements but it has not explicitly mentions in the WTO,
although several key provisions explicitly allow for precautionary action. 23The concept of precaution
which find mention in SPS agreement but in this agreement this is an alternative to insufficient
evidence provide by a risk assessment, instead of a policy tool that allow sanction when the risk to the
environment is considered to be unacceptable.

21 ibid
22 id
23 id

GMOs and Bio-safety

The

insecure

status

of

the

pre-cautionary

principle

in

the

WTO.

the

SPS

Agreement and in Hormones dispute raises interesting issues for the CTE in the new trade related area
of genetically modified organisms and food, safety. The framework regulation governing GM foods
are

still

in

the

process

of

evolution.

There is a greater concern among the developing countries for the protection of native species. Many
environmentalists

have

been

looking

at

the

Bio-safety

Protocol and WTO agreements, such as SPS and TBT agreements, to see whether this new upcoming
framework is compatible with WTO rules. The issue is not solely about compatibility. bill also about
bow signatories implement the provisions of the agreement.24

24 supra n. 20

India and Environmental Issues at WTO

India
it

has

called

clearly impinges

for

moratorium

on

collective

on

ecological

linking

trade

security. It

is

and
not

environment
in

favour

unless

of

plain

protectionism being passed off as environmental concern. Further, it proposed to ensure that any
decisions which attempt to bring in environmental considerations to modify trade relations conform
rigorously to the RIO consensus;if trade advantages are to recede due to 'restrictions under the garb of
environment', it would not only hit the country's development efforts but also aggravate the
environmental problems themselves. In the country's opinion, the whole idea of international ecolabelling based on processes amounted to legitimization of extra-territorial interference. However,
India ^dees not in disconformity that environmentally harmful processes should be stopped and
alsoover-exploitation of non-renewable resources should be controlled. India does not share the view
of
North

that

forest

conservation

should

imply

leaving

them

untouched

completely.25

Forest in India are considered as community resource and therefore they are used by and large,
sustainably.

When

environmental

effects

crossed

national

boundaries, the affected nations, have the right and duty to safeguard their vital concerns. India is also
a signatory to the TBT as well SPS Agreements. Now there is a greater emphasis on bringing Indian
standards to international levels. Most standards in India are voluntary although heath and safety
regulations and mandatory -for several products. The BIS (Bureau of Indian Standards) is responsible
for formulating national standards and has so far formulated17,428 Indian standards for various
sectors. It is also engaged in harmonizing Indian standards with international standards26.
In order to understand and clarify the Doha Declaration and its effect trade and environment
India has made a submission (dated 20February, 2003) giving the views on interpretation of
MEAs and other specifictrade obligations. "India considers that MEA should have the
following elements:27
(i)it

should

have

been

negotiated

Under

the

aegis

(ii) its procedure should stipulate the participation of all countries

(iii)effective participation of all the geographical regions;
25 P.K. rao, International Environmental law and economics, 1st ed 2002, p.254
26 id
27 supra n.20

of

the

UN.

(iv)the agreement must contain provisions for accession of fresh members.

Conclusion
Trade liberalisation and environmental protection share a common aim to enhance
social

welfare

by

improving

the

quality

of

life.

In

pursuing

for

this

cherished common goal considerable amount of conflict arose over the adoption of
approaches and emphasis. The issues concerning environment have grown in
prominence

for

both

domestic

and

international

policy

agendas.

The

environmental issues affecting or effecting trade draws the attention of the policy
makers. The problem of environment has revealed the ecological inter-dependence. No
country

has

complete

environmental

independence.

For

the

redressal of the problem the international co-operation is required.

Just as environmental issues are increasingly shaping trade policy, the
economic inter-dependence of the world is influencing the dynamics of environmental
policy. There exists the linkage between trade liberalisation and environmental
protection.

For

this

WTO

has

now

laid

the

foundation

for

reconciling the both actual as well as potential conflicts between international trade and
protection of the environment. Now it is up to the CTE and MinisterialL.Conference to
evolve

the

additional

aspects

of

the

trade

and

environment

agenda,

The new trade and environmental conflicting issues especially in the area of food
safety,. Subsidies,- intellectual property and services, urgently required attention. There
is an urgent need to evolve a through and transparent decision making process to. be
evolved within the institutional framework of the WTO then only the conflict of trade
and environment can be reconciled.
There

is

also

need

for

the

WTO

to

give

specific

recognition

to

environmental values. Article XX (b) & (g) of the GATT 1994 might be amended to
provided a general exception for trade measures that are reasonably necessary for the
protection of the domestic environment. In addition, Article XX may also
be amended to provide a safe harbour for multilateral environmental agreements that
employ

trade

measures,

which

are

reasonably

necessary

and

reasonably

related to the subject matter of the agreement. Further there is a need for adopting.

BIBLIOGRAPHY

A.K. Kaul, Trade and Environmental Law, 1st ed. 2005, Bharat Law House, Jaipur
Daniel c esty, greening the Gatt, IIE 1994 july , Washington DC.
P.K. Rao, International Environmental Law and Economics, Blackwell Publishers, 2002
Cairo A.R. Robb (ed.), Trade and Environment, International Environmental Law Reprts, Vol 2,
Cambridge Unviversity press, London
S. Charnovitz, Exploring The Environmental Exceptions in GATT, (1991) 25 Journal of World
Trade

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